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Chemring Group PLC on Tuesday said annual results were in line with expectations despite first-half headwinds. The Hampshire, England-based company is a provider of technology products and services to the aerospace, defence and security markets. Pretax profit rose 21% to £53.3 million in the financial year that ended October 31 from £44.1 million in financial 2023. Adjusted operating profit rose 3.6% to £71.7 million from £69.2 million at constant currency, in line with guidance provided in October. Despite this, shares in Chemring fell 11% to 322.55 pence each in London on Tuesday morning. The stock is down 4.7% over the past year. Analysts said forecasts for the Sensors & Information unit may be reduced. Group revenue increased by 8.0% to £510.4 million from £472.6 million or by 9.5% at constant currency. Growth was driven by a strong performance at Roke, up 17%, and growth in the specialist energetic materials businesses, up 12%, offset by a weaker period for Countermeasures. Underlying operating profit margin narrowed to 13.9% from 14.6% primarily due to operating challenges at the Tennessee countermeasures business, Chemring said. A record order book of £1.04 billion, the highest in Chemring’s history, provides ‘excellent medium-term revenue coverage,’ the company said. It is 16% higher than £921.6 million a year ago. Looking ahead, Chemring said 2025 performance remains in line with market expectations, with a similar second half weighting. Around 77% of expected 2025 revenue is already covered by the order book, with ‘unprecedented cover’ in Countermeasures & Energetics for 2026 and 2027 at 81% and 52%, respectively, Chemring said. Analysts at Jefferies said reiterated guidance is ‘clearly helpful’ given the ‘much talked about’ decline in Sensors & Information orders, including Roke. Order intake in financial 2024 in Sensors & Information was down 31% to £149.7 million from £215.4 million. ‘At first glance, we expect consensus estimates in this area to fall, however, this should be offset by the Countermeasures & Energetics business where the order book cover is stronger,’ the broker remarked. Chemring Chief Executive Michael Ord said the outlook for global defence markets is ‘increasingly robust’, with strong growth expected over the next decade. ‘This growing visibility gives us the confidence to continue to invest for the future, balancing near-term performance with longer-term growth and value creation,’ he added. Ord said Chemring is ‘well placed’ and maintains an ambition to increase the annual revenue to around £1 billion by 2030. The company raised the annual dividend by 13% to 7.8 pence per share from 6.9p after a final payout of 5.2p, also up 13%. Copyright 2024 Alliance News Ltd. All Rights Reserved.
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